Credit crisis wipes £161bn off UK private pension pots
by Gill Montia
Story link: Credit crisis wipes £161bn off UK private pension pots
Aon has calculated out the damage so far caused by the credit crisis and recession to the private pension pots of 3.7 million people in the UK.
According to the insurer and pension provider, since the beginning of October 2007 defined contribution (DC) savings have lost 29% of their value.
Over a 17-month period, the total worth of the pension savings fell from £552 billion to £391 billion, marking a loss of £161 billion.
The research, which was undertaken for the BBC’s Ten O’Clock News, highlights the impact of falling share prices on individual private pension plans, company DC schemes, and the additional voluntary contributions made by members of final-salary pension schemes.
Turning to the rapidly disappearing final-salary private sector pension, Aon found that the UK’s top 200 companies have a combined deficit of £19.4 billion, compared to a surplus of £1.4 billion in October 2007.
According to the Pension Protection Fund, 91% of the estimated 7,800 final-salary schemes in the private sector were in deficit in February, with a total shortfall of £219 billion.
In related news, Aon’s UK division announced this week that it is proposing to cut the contribution it makes to employees’ pensions, in efforts to reduce costs.
The firm has already closed its final salary scheme and may now reduce the level of its employer contributions by up to a half.
